Ajay, Salil and Ravi were partners in a firm sharing profits

34 :- Ajay, Salil and Ravi were partners in a firm sharing profits in the ratio of 5:3:2. Ajay died on 20^th February, 2025. The balance sheet of the firm on that date was as follows :

According to the partnership deed, on the death of a partner, the executor of the deceased partner will be entitled to :
(i) Balance in capital account
(ii) His share in profit/loss on revaluation of assets and reassessment of liabilties which were as follows :
(a) Machinery is to be revalued at Rs 45,000 and furniture at Rs 7,000
(b) A provision of 10% was to be created for doubtful debts.
(iii) The amount payable to Ajay was transferred to his executor’s loan acount which was to be paid laer.

Prepare revaluation account, Partner’s capital accounts, Ajay’s executors account and the balance sheet of Salil and Ravi who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus or deficit was to be transferred to Current Accounts of the partners.

Solution :-

WORKING NOTES :-
(i) Calculation of partner’s capital in new firm
Total capital of the new firm = Salil’s capital + Ravi’s capital
= 20,050 + 12,700
= Rs 32,750
Salil and Ravi would maintain their capital in new profit sharing ratio I.e, 3:2
Salil’s capital in new firm = 32,750 x 3/5 = Rs 19,650
Ravi’s capital in new firm = 32,750 x 2/5 = Rs 13,100